Starbucks Will Pay Kraft Over $2 Billion

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Starbucks coffee for sale at a grocery store in New York on Nov. 30, 2010

Starbucks announced on Tuesday that an arbitrator said the company must pay Kraft Foods $2.23 billion in damages for cutting short its grocery-store deal with Kraft, Reuters reports.

Kraft started selling bags of Starbucks coffee in grocery stores in September 1998. Starbucks terminated the contract in March 2011 — three years early — accusing Kraft of multiple material breaches of contract (including mismanaging the brand). Kraft denied any breach of contract and said Starbucks must pay Kraft a fair value for the grocery-store-sold coffee, which brought in $500 million per year in revenue.